Investment promotion intermediaries–Report

More than 70% of government investment promotion intermediaries (IPIs) are missing out on investments and job creating opportunities, as a result of not providing accurate and timely information to potential investors, the World Bank has highlighted in a report.

The Global Investment Promotion Benchmarking (GIPB) 2009 Report, released yesterday, stated that the effective promotion of foreign investments was becoming an increasingly competitive activity for countries, given the “shrinking economic environment.”

Foreign direct investment (FDI) flows could decline by between 30% and 40% in 2009, given the global economic slowdown, noted the authors, adding that this would lead to more competition for fewer projects.

For this reason, the ability of IPIs to influence investment decisions, through the provision of timely and relevant country and sector information would be crucial, the bank said.

“IPIs should rethink their strategies to maintain their relevance in the current FDI context, including shifting focus in the short-to-medium term, from outreach to offering more professional facilitation services to any new opportunities knocking on their doors, and offering aftercare services to existing businesses to ensure the retention of jobs in the economy,” stated the report.

The World Bank added that the effective provision of relevant information could lesson investors' perceptions of risk and their transaction costs during the site selection process.

“If country information is hard to obtain, investors will simply go elsewhere,” World Bank Group Investment Climate Advisory Manager Cecilia Sager commented in a statement.

Meanwhile, the report highlighted that IPIs in the high-income economies of the Organisation for Economic Cooperation and Development (OECD), had performed “substantially better” than the IPIs in other regions.

A country's wealth was not necessarily the only determinant of successful investment promotion, noted the authors, adding that a number of middle-income countries, including Botswana, had done very well on tight budgets.Even some low-income countries, including Senegal and Ghana, had outperformed some OECD countries, as well as other African middle-income countries, such as South Africa and Namibia.

In fact, only two IPIs in Africa, namely Botswana and Mauritius, had met investors' long-listing needs at a level of good practice, while a number of other African IPIs had achieved average performances, said the report.

Credit: Engineering News